Values not value
Quality, low prices and good service, no longer enough

Business today is so competitive, there is little difference between leader and runner-up in many product categories. Quality, low prices and good service are no longer guaranties of success and companies must find new ways of differentiating themselves.

These are some of the conclusions that Fred Crawford, executive vice-president at Cap \Gemini Ernst & Young's consumer product consulting practice, has reached during extensive recent research.

"Historically product features and functions were the primary determinants of value in business," said Crawford, who was in town last week to explain his findings to local Cap Gemini employees, clients and potential clients. "Today quality is merely the ante to get into the game."

Crawford, a marketer by trade has been conducting focus groups with consumers all his life. But in the last few years he has seen a sea change in attitudes.

"Businesses are always trying to improve their products," said Crawford. "But today, human values, such as trust, respect, honesty and dignity are becoming more important to consumers." Crawford cites Wal-Mart's "everyday low price" policy, as an example of how a company can promote "honesty."

"Wal-Mart does not offer the lowest price nor the highest quality on all items," said Crawford. "But it offers a good price relative to the quality offered. Consumers know that they can run into a Wal-Mart branch, buy a product and be fairly certain they are getting honest value for their money."

This strategy contrasts with those of retailers, which offer high-low strategies, that draw traffic with loss-leaders and hope that consumers pick up higher priced items to compensate.

But aren't honesty and trust, universal values that have always been important? "They have," said Crawford. "What's different today, is the degree to which they matter. A decade or two, consumers had more time, and could visit two or three stores before making a purchase. Today they don't have that luxury."

Crawford's extensive research, conducted by Internet and telephone polling among 5,000 subjects revealed more than a few surprises. Consumers are not looking for the cheapest price nor the best quality. In fact consumers don't expect businesses to excel at everything. But they do want to be treated as human beings who matter.

In practice that means companies should try to dominate in only one of the five elements of a commercial transaction said Crawford. These he defines as price, product, access, service and customer experience. Of the other categories, the company has to differentiate itself in one, and to perform at or slightly above industry standards in others.

For example BMW is a great luxury car. But the market is crowded with a variety of players with similar offerings such as Lexus, Mercedes and Volvo. So BMW stands out by focusing on the customer experience part of the commercial transaction. It's slogan the "ultimate driving experience," extends beyond what takes place on the road.

"When my car is due for an oil change, the dealer calls me," said Crawford. "If I say I'm too busy, they offer to pick up my car. If I need my car, they'll leave me a loaner." With that kind of service it's no wonder BMW is seeing such success, said Crawford.

Crawford is so convinced by the results of his research, that he has parlayed them into a book, which he co-authored with futurologist Ryan Mathews titled The Myth of Excellence: Why great companies never try to be the best at everything." The "myth" being that companies have to be good at everything to succeed.

Cap Gemini was very supportive, giving Crawford time off to promote the book. The company also bought so many copies to hand out to actual and potential clients, the book even make it briefly onto the business best-seller list.

North of the border, Crawford cites Canadian Tire as an example of a company that is succeeding in a competitive sector where there is little differentiation by promoting values, in this case: patriotism.

"The highlight the fact they are Canada's company in a variety subtle and not so subtle ways including their name, corporate color, advertising and the promotion of Canadian suppliers. And it works," said Crawford. "Remember, "think values, not value."

 

 

E-mail can be sent to Diekmeyer at: peter@peterdiekmeyer.com

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